Over the past 24 hours, the cryptocurrency market witnessed a significant drop, leading to $249 million worth of long positions being liquidated due to the rise in the 10-year U.S. Treasury yield.
Reason Behind the Crash
Bitcoin's sharp price decline followed an increase in the 10-year U.S. Treasury yield. The Institute for Supply Management (ISM) released its latest report indicating a rise in the December Purchasing Managers' Index, sparking inflation concerns.
Market Reaction
In response to this data, U.S. equity markets also experienced a substantial drop. The Nasdaq-100 index fell by 1.3% and the S&P 500 slipped by 0.57%. Shares of MicroStrategy, the largest corporate holder of Bitcoin, dropped nearly 9% on Tuesday.
Experts' Position
Although the ISM services index is concerning for risk assets, Oliver Allen of Pantheon Macroeconomics believes that these data might not indicate a persistent inflation trend.
Markets continue to experience turmoil due to inflation concerns causing sharp fluctuations in cryptocurrency and stock prices. While recent economic data are alarming, experts caution against drawing definitive conclusions too soon.
